CCL Products - Good Results despite plant being shut for maintenance! - Nirmal Bang

Consolidated Revenues for the quarter were flat YoY at Rs. 126 crore. On a QoQ basis, they were down 10.4%. This was because of the Indian Plant being shut for maintain ace and Technology Upgradation for ~ 40 days. The work is been completed and now the plant is again fully operational.

- Coffee prices have remained firm during the quarter.

- EBIDTA margins (excluding the forex gain of Rs.2 crore in the current quarter and loss of Rs.8.3 crore in Q1FY13) was higher by 160 bps QoQ at 21.6%.

- Adjusted PAT was higher by 64% YoY at Rs.13.7 crore on the back of better EBIDTA margins during the quarter despite higher taxes. However, there was higher forex loss in Q2FY12.

- EPS for H1FY13 stands at Rs.16.

Other Highlights

Vietnam plant is expected to begin its production from mid of October 2012. The total capacity of this plant would be 10000 tonnes p.a. and the company has plans to add another 5000 tonnes p.a at this plant in FY14E.

Currently, trial runs are being conducted at the Vietnam plant.

Valuation & Recommendation

Current Quarter results are good despite plant being shut for ~ 40 days. Q3 and Q4 quarters seasonally are better quarters for coffee sector due to good demand resulting in better pricing power for coffee sellers. We are marginally reducing our numbers for FY13 and increasing for FY14E since the Vietnam Plant is still to get into operational.

We had recommended the stock at Rs.223 on 15th June 2012 with a price target of Rs.300 which has been achieved. At CMP, the stock is trading at 7.5x and 5.3x its FY13E and FY14E earnings. We continue to be positive on the stock and continue to maintain BUY rating with a new target price of Rs. 400 based on FY14E earning expectations.

Source : Equity Bulls

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